You might work alongside your small business’s directors or shareholders every day. But when was the last time you sat down formally to talk business?
Entities such as corporations, limited liability companies, etc., are required to bring their boards of directors together once a year. Even legal entities with just one or two directors or shareholders often must hold the well-known “annual meeting.” Unfortunately, the required session is overlooked by some small business owners, EricJohn Ltd. owner Eric Buechler reminds us.
We’ll leave the legal requirements to your attorneys. But you should be aware that decisions made at annual meetings can have tax implications. For example, corporate boards typically set policies about business issues ranging from reimbursement rates for expenses to employee retirement benefits. Boards and/or shareholders also approve executive salaries, loans to company officers and stock offerings, among other actions.
Documenting those decisions is evidence to the Internal Revenue Service and other tax authorities that your corporation is active. The decisions also may become important in case of a tax audit.
You probably don’t need to hold your business’s annual meeting near tax time. But it can be convenient for a small business to accomplish the meeting while dealing with a tax return, especially if it is a family business with few officers and shareholders.
EricJohn Ltd. can witness and assist in recording your company’s annual meeting. Phone or email Eric to schedule a brief annual shareholder meeting.